St Annes-based Newfield Jones made four office staff and 14 site workers – including skilled joiners and labourers – redundant last week.

Managing director John Hayfield said he made the move reluctantly, but was forced to act as the market for new homes dries up.

Mr Hayfield said: "This is not a local problem, it's a national one. Housebuilders are some of the first to feel the hit.

"New house sales have effectively stalled. We cannot continue to build if there is nobody buying the homes.

"And if we build and they stand empty, we have to pay council tax on those properties until they sell which can run into hundreds of thousands of pounds.

"With the housing market stalled, energy and food prices going up, I fear we are heading towards a nasty recession in this country.

"We made it through last time because we were a small company. Since then we have expanded and now need to cut back.

"We have enjoyed some very successful years with housing sales, but now we have to scale down production.

"We have to make sure supply matches demand."

Mr Hayfield lays the blame squarely at the feet of the those who employed risky banking practices over recent years which gave mortgages to people who later defaulted, especially in the American sub-prime market.

The crisis has left the British banks more reluctant to give mortgages, especially to first time buyers who traditionally need to borrow a higher percentage of the cost of their home.

Mr Hayfield said: "It is the inevitable consequence of the credit crunch.

"There are people who want to buy, but they cannot get the mortgages, and even if they could, first time buyers don't have the deposits because they are using their savings," he said.

Mr Hayfield believes the Government and local councils can play their part in boosting the economy with a stamp duty holiday and council tax exemption for new homes.

"The situation is not helped by the dithering of the Government over stamp duty.

"Buyers are putting moves on hold in the hope of avoiding stamp duty costs if the Government does drop the charge.

"The holiday should be brought in immediately.

"And we need to look at the way council tax is collected on new homes.
"Really there is no incentive to housebuilders at the moment."